As Palm reports on their blog, Epic Games has demoed their Unreal Engine 3 on the Palm Pre. Unreal Engine 3 is the 'gaming engine' behind lots of your favorite console style games - from Gears of War to Batman: Arkham Asylum to BioShock to, well, a lot of games. We humbly assume it's because we asked for this in December.

Naturally it would be a little overly optimistic to hope for console-level graphics and gamelength on a mobile phone, but if you were wondering if webOS had the potential to run with the big dogs when it comes to mobile gaming, the answer is yes. It's all possible, of course, because of the PDK. If you missed it, we've got a video interview with Palm discussion the philosophy and possibilities of the PDK.

UPDATE: The folks at Engadget were able to get a video demonstration (above) of Unreal Engine running on a Pre Plus at GDC, and it's pretty darned slick (though apparently not incredibly stable just yet).